4 firms bid for Hwange Colliery coke oven facelift

Vice President Phelekezela Mphoko (third from right) gives Hwange Colliery Company Ltd managing director Mr Thomas Makore a handshake during the commissioning of the company's new equipment last Friday. On the VP's left is MInes and Mining Development Minister Walter Chidhakwa

Published: 24 June 2015

HWANGE Colliery Company Ltd has received bids from four companies interested in rebuilding its coke oven battery as it moves to increase regional exports.

The battery, which converts coking coal into coke, stopped operating two years ago after it became "too expensive to run", managing director Mr Thomas Makore said.

"We want to do a complete overhaul and we have received four bids for that particular job," said Mr Makore.

"The battery has design capacity of producing 18 000 tonnes of coke per month.

"Hwange, which recently commissioned equipment worth $31,2 million, is looking at pushing more volumes of coke into the region as it targets to return to profitability by September this year.

Hwange is currently producing coke through tolling arrangements with "third parties".

The company supplies coke mainly to copper smelters in Zambia and the Democratic Republic of Congo.

Despite logistical challenges, Mr Makore said the company had adopted "an aggressive thrust" to increase its market share into the regional markets.

He added that the company would diversify customer base to improve volumes.

There were growing opportunities in the construction, tobacco and cement industries, he said.

"The recapitalisation programme is ongoing and the second phase, which includes rebuilding the coke oven battery and equipping the underground mine, is already underway," said Mr Makore.

Bids to finance and supply underground equipment have also been received. The company requires about $10 million to equip the underground mine to achieve monthly coal output of 60 000 tonnes from the current 40 000-45 000 tonnes.

The first stage of recapitalisation saw Hwange concluding vendor-financed transactions which included the acquisition of mining equipment from BEML worth $13 million funded by India Exim Bank while the other batch of equipment worth about worth $18,2 million was supplied BELAZ under the PTA Bank loan facility.

Hwange has been operating below capacity due to the use of obsolete equipment resulting in production inefficiencies. It is also saddled with huge debts amounting to $160 million and this has negatively affected the company's ability to access lines of credit.

The new equipment will see the company increasing coal production to 500 000 tonnes per month from 300 000 tonnes.

"With increased production and sales and employment of higher capacity machines, our cost per tonne will reduce," said Mr Makore.

"When our cost per tonne reduces, profitability improves. We are expecting therefore our sales to go up, our cost per tonne to go down and our cash position to also improve.

"We should see profitability in the third quarter to September and then going forward."